Labs Face Medicare Cuts, New Codes

It’s not an exaggeration to say the new Protesting Access to Medicare Act (PAMA) marks the biggest change for clinical labs since the Clinical Laboratory Improvement Amendments of 1988 (CLIA).

Harder to assess is whether the reality of implementing PAMA will match the most pessimistic predictions that the new law will drive smaller labs and healthcare providers out of business.

Congress focused on forestalling imminent cuts to Medicare reimbursements when it passed HR 4302, signed April 1 by President Barack Obama. PAMA postpones until March 31, 2015, cuts estimated at 24% to the Sustainable Growth Rate (SGR) formula, which was to run out in March.

But PAMA gives labs and providers much more cause for concern, with new rules for phasing in reimbursement cuts, and new procedures to set rates. The new law will also force labs and providers to implement new test coding systems that will add potentially thousands of new codes.